Bitcoin Shines As Hedge Against 'Major Geopolitical Events,' Says Research Firm

Bitcoin BTC/USD tends to shine as a hedge against geopolitical uncertainty, according to a report by financial services and infrastructure firm NYDIG.

Bitcoin Options Data Shows Caution

Following the Federal Reserve’s 50 basis point rate cut, options market data shows an unexpected pattern in trader sentiment, according to the report.

Despite bitcoin’s rally, there was "an increase in implied volatility (IV) for downside protection (buying puts on bitcoin) and a decrease in IV of options used to position for an upside move (buying calls on bitcoin)."

This indicates that traders may be skeptical about the sustainability of the recent price surge.

Corporate Adoption Of Bitcoin

On the corporate adoption front, Cathedra Bitcoin has joined the ranks of companies like MicroStrategy MSTR in adopting Bitcoin as a strategic investment.

NYDIG cautions against misinterpreting new metrics like MicroStrategy’s "Bitcoin per share" and “Bitcoin yield,” emphasizing that these terms don’t align with traditional financial definitions.

Bitcoin’s Relationship With Gold

The research also draws attention to gold’s impressive performance, up nearly 25% year-to-date and consistently setting new all-time highs.

While historically linked to real interest rates, gold’s recent price movements have been significantly influenced by central bank purchases, particularly from China.

Central bank demand for gold surged 140% from 2021 to 2022 and has remained high through early 2024.

NYDIG posits that Bitcoin, while not yet attracting significant central bank or government purchases (except for El Salvador), could benefit from similar geopolitical uncertainties that are driving gold’s rally.

The report states, "As a hedge against major geopolitical events, bitcoin tends to shine," suggesting potential parallels between gold’s current performance and Bitcoin’s prospects.

What’s Next: This analysis provides crypto-savvy investors with a nuanced view of market dynamics, corporate trends, and potential catalysts for Bitcoin’s value proposition in an increasingly uncertain global economic landscape.

The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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• Bitcoin’s Price Rally Could Be Driven By Multiple Factors In Coming Months: Standard Chartered

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